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> The U.S. cannot afford much inflation at the moment, since it would threaten the position of the dollar as the reserve currency in favour of the euro. Not bu

> The U.S. cannot afford much inflation at the moment, since it would threaten the position of the dollar as the reserve currency in favour of the euro. Not buying that, especially not at the moment - Greece is doing far more damage to the Euro as a reserve currency than anything the US could do to the dollar before August 2nd, and if Greece gets its house in order, there's still Portugal waiting in the wings. What's more, the US has an inflation rate right now that's practically nil, and I suspect China's interest is in the US spending again - their bond holdings exist for the sake of currency control, not as a legitimate investment.

tybris 15y ago
Obviously the euro zone is bad, but I think you're overestimating how healthy the dollar zone is. Oil supplies are dwindling, the weapons industry is losing importance, the financial industry is not what it used to be, the car industry is no longer competitive, few major infrastructure projects are being undertaken, IT is one of the few industries that is going strong, but it contributes relatively little. Europe has a healthy, productive economy to back up the euro and it's a threat to the dollar.
- danielsoneg 15y ago
  The USD has a century of relative stability behind it - there have been ups and downs, but there's never been a full-fledged currency crisis, and a USD from 1911 can still be used today. The Euro is a stronger threat to the dollar than we've had in some time, but it's still a relatively new currency and it's showing strains already. There's a reasonable scenario which the Euro is a secondary reserve currency, but it's going to take some time and some drastic crises in the US which somehow don't spill to the rest of the world before the USD gets dethroned. You're right, though - the picture's looked an awful lot rosier. I don't believe there's anything concrete that assures the US's decline, but that's not for lack of trying on the part of Congress.
Confusion 15y ago
China is buying euros and European debt by the billions. http://www.asianews.it/news-en/China-buying-Euro-debt-21897.html http://www.asianews.it/news-en/China-buying-Euro-debt-21897....
BadCookie 15y ago
Have you seen this? Looks like inflation is on its way up. http://bpp.mit.edu/usa/ http://bpp.mit.edu/usa/

tybris 15y ago

Obviously the euro zone is bad, but I think you're overestimating how healthy the dollar zone is. Oil supplies are dwindling, the weapons industry is losing importance, the financial industry is not what it used to be, the car industry is no longer competitive, few major infrastructure projects are being undertaken, IT is one of the few industries that is going strong, but it contributes relatively little. Europe has a healthy, productive economy to back up the euro and it's a threat to the dollar.

danielsoneg 15y ago
The USD has a century of relative stability behind it - there have been ups and downs, but there's never been a full-fledged currency crisis, and a USD from 1911 can still be used today. The Euro is a stronger threat to the dollar than we've had in some time, but it's still a relatively new currency and it's showing strains already. There's a reasonable scenario which the Euro is a secondary reserve currency, but it's going to take some time and some drastic crises in the US which somehow don't spill to the rest of the world before the USD gets dethroned. You're right, though - the picture's looked an awful lot rosier. I don't believe there's anything concrete that assures the US's decline, but that's not for lack of trying on the part of Congress.

Confusion 15y ago

China is buying euros and European debt by the billions. http://www.asianews.it/news-en/China-buying-Euro-debt-21897.html http://www.asianews.it/news-en/China-buying-Euro-debt-21897....

BadCookie 15y ago

Have you seen this? Looks like inflation is on its way up. http://bpp.mit.edu/usa/ http://bpp.mit.edu/usa/